FASB Votes To Remove QSPE Concept from FAS 140, Scope Exception from FIN 46R
April 2, 2008
On April 2, 2008, the Financial Accounting Standards Board (FASB) voted to remove the Qualified Special Purpose Entity (QSPE) concept (used for some securitizations) from FAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, and as a result, to remove the related scope exception from FIN 46R, Consolidation of Variable Interest Entities (VIEs). The board then approved a number of other amendments to FAS 140 including amendments to the derecognition criteria in paragraph 9 of FAS 140, and to provide guidance on the "unit of account" as relates to when a "portion" of an asset can be derecognized.
These actions are part of a short-term project to amend FAS 140 on the QSPE issue, although FASB has also had a longer term project to address other matters in FAS 140, dating back to its 2005 Exposure Draft of proposed amendments to FAS 140.
FASB’s actions are also responsive to a request from the U.S. Securities and Exchange Commission (SEC) (noted on page 4 of the SEC’s January 8, 2008 letter to the American Institute of Certified Public Accountants (AICPA) and FEI), that FASB address QSPE-related issues in FAS 140 so that changes will be effective this year-end.
Further details can be found in these FEI summaries (FEI member login required to view):
o Detailed Summary of FASB Amendments to FAS 140 Re: QSPEs
o FASB Board Members Comments on Removing QSPE Concept From FAS 140
o FASB Responds To SEC Request to Address FAS 140
Other summaries from:
Prepared April 2, 2008 by Edith Orenstein, Director, Technical Policy Analysis, Financial Executives International (FEI). This summary does not reflect FEI opinion unless specifically noted above.